Economy

AfDB Dismisses World Bank’s Comments on Africa’s Debt Profile As Inaccurate, Not Fact Based

Published

5 years ago

February 14, 2020

Eric

By Eric Elezuo

Following a statement credited to the President, World Bank, David Malpass, that some Multilateral Development Banks, including the African Development Bank, have a tendency to lend too quickly and in the process, add to the continent’s debt problems, the management of the bank has reacted, saying that the statement is incorrect, and not based on facts.

In a statement refuting the World Bank President’s comments, and released in Abidjan, the Director of Communication and External, Relations Department, Mr. Victor Oladokun, stated categorically that the “statement is inaccurate and not fact based. It impugns the integrity of the African Development Bank, undermines our governance systems, and incorrectly insinuates that we operate under different standards from the World Bank. The very notion goes against the spirit of multilateralism and our collaborative work.”

He further revealed that:

“For the record, the African Development Bank maintains a very high global standard of transparency. In the 2018 Publish What You Fund report, our institution was ranked the 4th most transparent institution, globally.

“The African Development Bank provides a strong governance program for our regional member countries that focuses on public financial management, better and transparent natural resources management, sustainable and transparent debt management and domestic resource mobilization. We have spearheaded the issuance of local currency financing to several countries to mitigate the impacts of foreign exchange risks, while supporting countries to improve tax collection and tax administration, and leveraging pension funds and sovereign wealth funds to direct more monies into financing development programs, especially infrastructure.

“The African Development Bank’s Africa Legal Support Facility (ALSF) supports countries to negotiate terms of their royalties and taxes to international companies, and terms of their non-concessional loans to some bilateral financiers. We have been highly successful in doing so.

“These are the facts:

“The World Bank, with a more substantial balance sheet, has significantly larger operations in Africa than the African Development Bank. The World Bank’s operations approved for Africa in the 2018 fiscal year amounted to US $20.2 billion, compared to US $10.1 billion by the African Development Bank.

“With regard to Nigeria and South Africa, the World Bank’s outstanding loans for the 2018 fiscal year to both countries stood at US $8.3 billion and US $2.4 billion, respectively. In contrast, the outstanding amounts for the African Development Bank Group to Nigeria and South Africa were US $2.1 billion and US $2.0 billion, respectively, for the same fiscal year.

“With reference to the countries described as “heavily indebted,” our Bank recognizes and closely monitors the upward debt trend. However, there is no systemic risk of debt distress.

“According to the 2020 African Economic Outlook, at the end of June 2019, total public debt in Nigeria amounted to $83.9 billion, 14.6% higher than the year before. That debt represented 20.1% of GDP, up from 17.5% in 2018. Of the total public debt, domestic public debt amounted to $56.7 billion while external public debt was $27.2 billion (representing 32.4% of total public debt). South Africa’s national government debt was estimated at 55.6% of GDP in 2019, up from 52.7% in 2018. South Africa raises most of its funding domestically, with external public debt accounting for only 6.3% of the country’s GDP.

“Development Banks continue to play critical roles in development efforts and in the aspirations of developing countries, most especially in Africa.

“Given substantial financing needs on the African continent, the development assistance of the African Development Bank, the World Bank and other development partners remain vitally important, with increasing calls for such institutions to do even more.

“The lending, policy, and advisory services of these development institutions in their respective regions are often coordinated and provide substantially better value-for-money to developing nations, compared to other sources of financing. As a result of the African Development Bank’s AAA-rated status, we source funding on highly competitive terms and pass on favorable terms to our regional member countries. Combined with other measures to ensure funds are used for intended purposes, it helps regional member countries finance debt and development in the most responsible and sustainable way.

“With regard to the need for better lending coordination and the maintenance of high standards of transparency, the African Development Bank coordinates lending activities, especially its public sector policy-based loans, closely with sister International Financial Institutions (notably the World Bank and the IMF). This includes reliance on the IMF and World Bank’s Debt Sustainability Analyses (DSA) to determine the composition of our financial assistance to low-income countries; and joint institutional approaches for addressing debt vulnerabilities in the African Development Fund (ADF) and International Development Association (IDA) countries.

“In addition, country economists of the African Development Bank fully participate in regional and country level IMF Article 4 missions. Contrary to suggestions, these are just a few concrete examples of historic and ongoing coordination between sister Multilateral Development Banks, IFIs, and development partners. The African Development Bank is committed to the development of the African continent. It has a vested interest in closely monitoring debt drivers and trends in African countries as it supports them in their efforts to improve the lives of the people of Africa.

“We are of the view that the World Bank could have explored other available platforms to discuss debt concerns among Multilateral Development Banks. The general statement by the President of the World Bank Group insinuating that the African Development Bank contributes to Africa’s debt problem and that it has lower standards of lending is simply put: misleading and inaccurate.”

Economy

IMF Scores Tinubu’s Economic Reforms Below Pass Mark

Published

4 weeks ago

April 20, 2025

Eric

The International Monetary Fund (IMF) says that Nigeria faces significant uncertainty in its economic outlook despite wide-ranging reforms.

It, however, noted that the gains are yet to benefit all Nigerians with poverty and food insecurity remaining high.

Concluding its 2025 Article IV Consultations with Nigeria’s public policy executives during the week, IMF’s team, led by Axel Schimmelpfennig, its mission chief for Nigeria, acknowledged that Nigeria has taken important steps to stabilize the economy, enhance resilience, and support growth.

The IMF team had met with Minister of Finance and Coordinating Minister of the Economy, Wale Edun, Minister of Agriculture and Food Security, Abubakar Kyari, Central Bank of Nigeria Governor, Yemi Cardoso, senior government and central bank officials, the Ministry of Environment, the private sector, academia, labour unions, and civil society.

Although the IMF representatives said these reforms have put Nigeria in a better position to navigate the external environment, the macroeconomic outlook remains marked by significant uncertainty.

They said that the elevated global risk sentiment and lower oil prices would impact the Nigerian economy.

They, therefore, recommended that macroeconomic policies need to further strengthen buffers and resilience, reduce inflation, and support private sector-led growth.

The final report of the consultations stated: “The Nigerian authorities have taken important steps to stabilize the economy, enhance resilience, and support growth.

‘‘The financing of the fiscal deficit by the central bank has ceased, costly fuel subsidies were removed, and the functioning of the foreign exchange market has improved.

‘‘Gains have yet to benefit all Nigerians as poverty and food insecurity remain high.

‘‘The outlook is marked by significant uncertainty. Elevated global risk sentiment and lower oil prices impact the Nigerian economy.

‘‘The reforms since 2023 have put the Nigerian economy in a better position to navigate this external environment. ‘‘Looking ahead, macroeconomic policies need to further strengthen buffers and resilience, while creating enabling conditions for private sector-led growth.

“The authorities communicated to the mission that they will implement the 2025 budget in a manner that is responsive to the decline in international oil prices. A neutral fiscal stance would support monetary policy to bring down inflation.

‘‘To safeguard key spending priorities, it is imperative that fiscal savings from the fuel subsidy removal are channeled to the budget.

‘‘In particular, adjustments should protect critical, growth-enhancing investment, while accelerating and broadening the delivery of cash transfers under the World Bank-supported program to provide relief to those experiencing food insecurity.

“A tight monetary policy stance is required to firmly guide inflation down. The Monetary Policy Committee’s data-dependent approach has served Nigeria well and will help navigate elevated macroeconomic uncertainty.

‘‘Announcing a disinflation path to serve as an intermediate target can help anchor inflation expectations.”

Economy

My Policy on Fuel Subsidy Removal Yielding Results, Says Tinubu

Published

2 months ago

March 11, 2025

Eric

President Bola Tinubu has declared that his fuel subsidy removal policy is yielding the desired results, pointing out that prices are gradually declining.

The President also asserted that investors are increasingly showing interest in the Nigerian economy, a development he attributed to the removal of fuel subsidies, a policy introduced on 29th May 2023.

Tinubu made these remarks on Monday while inaugurating the National Youth Council at the Presidential Villa, Abuja.

Addressing the youths, Tinubu emphasised that while politicians will always be politicians, true leadership is about fostering development that benefits future generations.

He urged Nigerian youths to take advantage of the opportunities being created by the government, particularly in the ICT sector, to contribute to national development.

Tinubu said: “I have listened to you. Today is not for long speeches. I just want to reassure you that you are the hope of this country. Everything rests on your shoulders. Every decision I have taken is about you and the future.

“When we removed the fuel subsidy, we were securing a future for generations yet unborn. Where is the investment? Where is the infrastructure? When you hear many professionals say they want to ‘JAPA’, it is because prosperity is not widespread at home. If we create opportunities and empower our people, they will have no reason to leave.

“This is your country to develop, build, and prosper in. The government is fully committed to you. Take this seriously. You can criticise politicians all you want, but ultimately, politics is about development and securing a future for the next generation.

“At the beginning, it seemed uncertain, difficult, and even hopeless. It felt like drawing water from a dry well. But today, the economy is turning a corner. Prices are falling, confidence in our economy is improving, and investors are showing interest. Technology is advancing, and you have opportunities before you.”

The President reminded the youths that they have a crucial role in advancing the nation’s development.

“It is all in your hands. My role is to help navigate, push, and implement key programmes to clear the path for you. But it is up to you to seize the moment. Look me in the eye and tell me what you think—whether it is right or wrong—and offer suggestions. We will consider them as long as they contribute to the prosperity of this country.

“I assure you that we will do everything possible to make Nigeria a better place for you, but we cannot do it alone. You represent over 60 per cent of our population. You are the heartbeat of our nation, and I hope you take this opportunity very seriously,” he said.

Economy

Naira Gains over Dollar for Three Straight Days in Parallel FX Market

Published

3 months ago

February 15, 2025

Eric

The Naira recorded three consecutive days of appreciation against the dollar in the parallel foreign exchange market, ending the week on a high note on Friday.

According to Abubakar Alhasan, a Bureau de Change operator in Wuse Zone 4, Abuja, the Naira strengthened to N1,565 per dollar on Friday, up from N1,570 on Thursday.

On a day-to-day basis, the Naira gained N5 against the dollar compared to the N1,570 traded on Thursday.

In the last three days, the Naira has gained N15 against the dollar in the black market.

In contrast, in the official market, the Naira continued to depreciate as of Thursday, according to data from the Central Bank of Nigeria.

The apex bank’s exchange rate data showed that the Naira fell to N1,507.88 per dollar on Thursday from N1,504.30 on Wednesday.

Overall, exchange rate movements across FX markets showed that the Naira ended the week with mixed sentiments of losses and gains against other foreign currencies.